Elon Musk saw his net worth tumble by over $15bn as shares in Tesla fell by 8.6% on Monday. While 2020 was an outstanding year for the electric vehicle manufacturer, its performance over the past week has brought its future prospects back into focus. 

Tesla share price

Despite recent losses, the Tesla share price is up 465% over the past 12 months to $742 per share. During 2020, in the midst of the pandemic, the electric car maker saw a 743% rise in the value of its shares. Stretching back further to October 2019, Tesla stock is up by around 1300%.

Analysts have given mixed views for Tesla over the coming year. Colin Rusch, analyst at Oppenheimer, has set his price target at $1,036. While Dan Ives of Wedbush, set a price target of $950, more than $200 above where Tesla is currently trading.

Sales

Tesla delivered nearly 500,000 electric vehicles in 2020, up 36% from the year before. Over a “multi-year horizon”, the company expects to achieve 50% average annual growth in sales. The electric vehicle manufacturer is on track to begin deliveries of its Model Y capacity from its Gigafactory Berlin and Gigafactory Texas in 2021. 

Morgan Stanley believes Tesla “can leverage its cost leadership in EVs to aggressively expand its user base, over time generating a higher percentage of revenue from recurring and high-margin services revenue.”

Risks

Tesla’s price to earnings ratio is in excess of 200. Put simply, the car maker’s profits will have to grow substantially in the coming years to justify this value.

This could become a problem for Tesla as competition from other manufacturers is intensifying. Volkswagen ended 2020 with over 400,000 new electric vehicle sales. While Nio, XPeng and Li Auto, Chinese electric car makers listed on the New York Stock Exchange, are worth a combined $166bn.